Frigid winter, soaring natural gas prices send heating costs up 34%

Another long stretch of below-normal temperatures combined with spiking natural gas prices can only add up to one thing — a much more costly winter for utility customers.

We Energies says a typical customer’s bill will be about 34% higher than last year — and higher still if colder-than-normal temperatures persist through the rest of March and April.

A typical customer spent about $552 last winter to heat their home with natural gas, and can expect to pay $739 this winter between Nov. 1 and April 30, We Energies spokesman Brian Manthey said Tuesday. The utility had forecast last month that bills would rise about 20%.

The coldest winter in nearly 40 years is, of course, a key culprit here. But the weather has been so cold over so much of the nation that natural gas prices have spiked — and utilities have used much of the natural gas they placed in storage last summer when prices were lower, he said.

As a result, the residential price of natural gas this month is higher than any month since 2008 — before the "shale gas revolution" from hydraulic fracturing led to dramatic increases in the domestic production of natural gas.

The State Energy Office says the price paid by utility customers this month is the highest for any March since at least 1996. The price per 1,000 cubic feet of natural gas this month is $12.37, up 72%, or more than $5, from last year at this time, according to the state.

Other Wisconsin utilities are also forecasting big jumps in heating costs this winter.

In Eau Claire, customers of Xcel Energy's Northern States Power utility will have paid about 30% more between November and March, compared with last winter. That amounts to a bill for heating of $590 for a typical customer in Wisconsin, said utility spokesman Brian Elwood, compared with about $450 last year.

Over the whole winter, natural gas prices have been about 25% higher than last winter, with the weather colder than last year, according to Xcel.

In northeastern Wisconsin, where the winter has been among the very coldest on record, Wisconsin Public Service Corp. spokesman Kerry Spees says its winter heating costs look to be up 34% for November through the end of this month. Based on the fact that the forecasts continue to call for below-average temperatures, he said, the increase for the Green Bay utility's customers could be in the range of 36% to 38%.

At Wisconsin Power and Light Co. in Madison, natural gas customers can expect an increase in the range of 20% to 25% between November and the end of March, compared with last winter, spokeswoman Annemarie Newman said.

"While we did have some higher costs when daily gas prices spiked to very high levels, we were mostly protected by our gas storage, our hedging programs and additional gas supplies we could call on at reasonable prices so we don’t expect the rate impact to be too great," she said.

Even with the increases and frigid weather this won’t be the most expensive winter heating season on record, utility representatives say.

In a comparison of the past 10 winters with We Energies’ latest forecast, four have been more expensive, and six have been less costly for the utility’s more than 1 million natural gas customers.

From November through February in Milwaukee, the winter has been the coldest since 1976-'77, and if it ended today would be the eighth-coldest since the early 1890s, according to weather records compiled by the utility.

If colder than normal temperatures persist through April — which is more than likely to occur in Wisconsin, according to the National Weather Service — this could end up being one of the five coldest winter heating seasons on record, according to We Energies.

“All utilities are in the same boat,” Manthey said. “Most of the gas in storage is used, and when inventories are down in storage, the need to buy gas on the spot market has been greater. It’s been cold all throughout the country so the demand has been great.”

A report last week from the federal Energy Information Administration said that the amount of natural gas in storage is nearly 50% down from last year — and nearly 50% below the average of the past five years.

About Thomas Content

Thomas Content covers energy, clean technology and sustainable business. A series he co-wrote on energy and climate change won top honors in 2008 from the National Press Foundation.

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